Importance of ethics and social responsibility in the business world

Introduction

Strategic ethics and social responsibility are two of the most important, yet perhaps most misunderstood concerns in the world of business today. By their very nature, these fields are controversial, and there is no universally accepted approach for solving their questions. On the other hand, government is encouraging organizational accountability for ethical conduct, and organisations are being asked to prevent and control misconduct by implementing ethics programs. By defining strategic ethics, we can link and compare it with the concept of social responsibility. In this way, we can examine applications in the business context, thus drawing conclusions about their roles in strategy.

Strategic ethics "comprises principles and standards that guide behaviour in the world of business" Ferrell and Fraedrich (2000:6). Social responsibility on the other hand is the obligation a business assumes toward society. Jennings (2003:6) defines these responsibilities as being economic, legal, ethical and philanthropic. A business' economic responsibilities are to produce goods and services that society needs and wants at a price that can perpetrate the business and satisfy its obligation to investors.

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English: Chart depicting the major kinds and inter...

Journal of Business Ethics

The legal responsibilities are the laws that they must obey. Ethical responsibilities are defined as behaviours or activities that are expected of business by society but are not codified in law. Philanthropic responsibilities are those behaviours and activities that society desires and business values dictate.

Social responsibility then can be viewed as a contract with society, whereas business ethics involves carefully thought out rules of business organizational conduct that guide decision making. Business ethics relates to rules and principles that guide individual and work group decisions, whereas social responsibility concerns the effect of organizational decisions on society.

The role of ethics and social responsibility in strategy

When a corporation's values and ethics support its strategy, the company's stability and success is enhanced. Ethics and...